Yahoo’s stock has dropped over 5 percent in after-hours trading on word that Microsoft is considering rescinding its offer to purchase the Internet giant. The news, as reported by Reuters, states that Microsoft feels Yahoo may have actually lost value since the initial offer was made.

Microsoft offered Yahoo $31-a-share in February in a cash and stock deal valued at $44.6 billion. However, since Microsoft’s stock has fallen in value since then, the deal is now thought to only be worth somewhere in the neighborhood of $42 billion. Yahoo’s stock had been trading substantially higher since Microsoft’s offer, shooting up from $19-a-share to near $30-a-share at times. Today’s news has so far pushed it back below the $27-a-share level and if Microsoft ultimately decides to pull out, it certainly could go much, much lower.

That fear, is no doubt part of Microsoft’s strategy here. Since Yahoo formally reject Microsoft’s offer back in February, the two sides have held a few talks, resulting in nothing (our coverage). Microsoft has said it was not going to raise the offer since it feels Yahoo has no real alternative but to accept it. Yahoo, meanwhile, is thought to be against negotiating without a sweetened deal.

While pushing a hostile takeover by replacing Yahoo’s board is widely thought to be Microsoft’s next move (our coverage), such actions can hurt morale in the company being taken over and it certainly would not help Microsoft’s public relations. A threat to pull out could get a number of Yahoo’s prominent shareholders, some of whom have already called upon the company to accept the offer, to step up their pressure in getting the deal done.